NEW YORK (Frankfurt: A0DKRK - news) , June 19 (Reuters) - U.S. stocks rose on Tuesday on hopes that the Federal Reserve will agree to extend stimulus measures as the economy struggles to recover and the euro zone's debt crisis gets worse.

The S&P 500 has gained 7.2 percent from a five-month intraday low reached on June 4. On Tuesday, the benchmark index closed above its 50-day moving average of 1,346.90 for the first time in seven weeks. But the sharp gains leave the market vulnerable if the outcome of Wednesday's Fed meeting doesn't meet market expectations.

"People are anticipating some type of response from the Fed tomorrow, and are buying or covering shorts in anticipation of that," said Paul Zemsky, head of asset allocation at ING Investment Management in New York. "There's a risk the market gets disappointed."

Markets kept a wary eye on developments in Europe (Chicago Options: ^REURUSD - news) . A sharp decline in German business sentiment, alongside stubbornly high Spanish bond yields, raised expectations for stimulus from European policymakers as well.

British media reports earlier said German Chancellor Angela Merkel was poised to use Europe's dual bailout funds, the European Financial Stability Facility and the European Stability Mechinism, to buy debt of countries like Italy and Spain.

"We went to the highs of the day on that, and we have the Fed tomorrow. This is a bailout, central bank largesse bounce, and we'll see what follow-through (occurs) after the Fed tomorrow and whatever becomes of the ESM," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.

A German government official told Reuters there was no discussion at the G20 summit in Mexico about using Europe's rescue funds to buy the bonds of stricken members of the euro zone.

The Dow Jones industrial average gained 95.51 points, or 0.75 percent, to 12,837.33 at the close. The Standard & Poor's 500 Index advanced 13.20 points, or 0.98 percent, to 1,357.98. The Nasdaq Composite Index rose 34.43 points, or 1.19 percent, to close at 2,929.76.

On Tuesday, the Federal Open Market Committee began the first day of a two-day meeting on interest-rate policy. The meeting got under way with expectations increasing that the U.S. central bank may extend its "Operation Twist" program, its effort to drive down long-term borrowing costs.

Spain's government bond yields eased slightly after it raised 3 billion euros at a short-term debt sale, with the higher yields enticing investors. However, with its 10-year bond yield above 7 percent, investors worry how long the euro zone's fourth-largest economy can survive without foreign help.

Oracle Corp rose 3.1 percent to $27.96 a day after it reported stronger-than-expected quarterly profit, releasing the results three days ahead of schedule after news of the pending departure of a senior sales executive fueled concerns that business was stagnating.

Walgreen Co (NYSE: WAG - news) tumbled 5.9 percent to $30.09 after the pharmacy chain reported quarterly earnings and said it would buy a 45 percent stake in Alliance Boots for $6.7 billion in a cash-and-stock deal.

FedEx Corp (NYSE: FDX - news) rose 2.8 percent to $91.01 after the package delivery company reported fourth-quarter earnings and provided an outlook for the first quarter and 2013.

Shares of J.C. Penney dropped 8.5 percent to $22.25 a day after its president abruptly left the department store operator following a botched advertising campaign.

Volume was light, with about 6.7 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, below last year's daily average of 7.84 billion.

Advancers outnumbered decliners by a ratio of 5 to 1 on the New York Stock Exchange, while on the Nasdaq, slightly more thant three stocks rose for every one that fell. (Reporting by Angela Moon; Additional reporting by Edward Krudy; Editing by Jan Paschal)

WASHINGTON -- Some of the toughest questions for JPMorgan Chase CEO Jamie Dimon during Tuesday's House Financial Services Committee hearing came from lawmakers who will either not be returning to Congress next year or will face steep hurdles to reelection.

The House panel is already known on Capitol Hill as the "cash committee" due to its members' penchant for Wall Street fundraising, but it will have even fewer critics of the financial establishment next year.

Rep. Barney Frank (D-Mass.), the ranking Democrat on the committee, provided some of the harshest questioning of Dimon early in the hearing, accusing Dimon of a "filibuster" and of deliberately misconstruing Frank's questions.

"I'm disappointed," said Frank, who is retiring at the end of the year.

Rep. Brad Miller (D-N.C.) pressed Dimon on a potential securities law violation, forcing him to dodge questions and resort to legally open-ended language about his "knowledge at the time." Miller has been redistricted out of his seat.

Later in the hearing, Rep. Brad Sherman (D-Calif.) bluntly declared that Dimon's bank is "too big to fail," and criticized Dimon for sending billions to London for risky derivatives trades, instead of lending the money to companies at home.

"You put forward the idea that ... there weren't small- and medium-sized businesses in the United States that were creditworthy that wanted the money," Sherman said. "And I assure you, there isn't a member of this panel that couldn't bring you 100 small- and medium-sized businesses, creditworthy, in need of loans from you. And instead, you took the $350 billion to London."

Sherman is embroiled in a bruising primary battle with Rep. Howard Berman (D-Calif.), a contest prompted by a separate redistricting plan.

Although the Dodd-Frank financial reform bill bears Frank's name, Sherman and Miller have been more critical of the Wall Street establishment during their tenure in Washington, and are almost certainly paying for that vocal opposition with their seats. Sherman has been out-fundraised by Berman, a favorite of Hollywood and the entertainment industry. Miller wrote the major consumer protection rules on mortgage lending for the 2010 Wall Street overhaul, and like Frank, was a critical legislative negotiator who shepherded the bill through Congress. That effort earned him the ire of a host of bank-affiliated business groups in North Carolina, where two of the most active subprime lenders of the past decade, Bank of America and Wells Fargo, have a major presence.

The Tuesday hearing followed Dimon's appearance before the Senate Banking Committee last week. House lawmakers were at times more aggressive than their Senate counterparts, who inspired a battery of criticism for their deferential treatment of Dimon. Freshman Rep. Sean Duffy (R-Wis.) pushed Dimon on whether his bank was "too big to manage" or "too big to regulate," while Rep. Maxine Waters (D-Calif.) hammered away at JPMorgan's reliance on flawed risk-modeling techniques.

But the committee's efforts in general this year have been overwhelmingly acquiescent to the preferences of big banks. Its official website lists nine pieces of bank deregulation that cleared the committee in 2011, plus one bill limiting debt issuance by Fannie Mae and Freddie Mac (even though, as wards of the state, Fannie and Freddie do not need to issue debt).

Historically, that deference to finance is a bipartisan phenomenon. For years, both political parties have packed the Financial Services Committee and its Senate counterpart with vulnerable lawmakers who can use their perch on the panel to leverage campaign contributions from Wall Street. And the major focus of the committees' efforts over the past three decades has been to deregulate Wall Street, with the Riegle-Neil Act of 1994, the Gramm-Leach-Bliley Act of 1999, and the Commodity Futures Modernization Act of 2000. Dodd-Frank, passed nearly two years after the financial crash of 2008, was pilloried by loopholes imposed by members of the House and Senate banking committees.

AIJ managed money for more than 100 companies, but was stripped of its registration in March after failing to account for most of its clients' funds.

Japanese prosecutors said 7bn yen of the missing money was stolen from clients.

More than 880,000 policy holders have been affected by the losses.

And in our Business Daily podcast, we look at allegations that Google has excluded or demoted websites from its internet search, after the European competition commissioner gave the company "a matter of weeks" to propose remedies to what the EC says are potential "abuses of dominances" in its internet search and advertising business.

What makes an entrepreneur? The BBC's Kim Gittleson and Tom Santorelli hear from Lowell Hawthorne, a Jamaican immigrant who, with nine of his family members, founded the Caribbean bakery empire Golden Krust, the United States' largest West Indian food chain.

Everyone knows when the boss is in at Golden Krust's New York factory: a trail of yellow crumbs leads from the machine floor to the adjoining office.

On the factory floor, Golden Krust's ovens turn out 400 perfect half-circles of nine types of Jamaican patties each minute. Lowell Hawthorne, Golden Krust's co-founder and CEO, spends his morning tasting the product before it is shipped across the United States.

The patties - spicy meat or fish filling surrounded by flaky, yellow dough - are a West Indian favourite. They are what the chain, which has more than 120 restaurants in nine US states and more than $100m (£64m) in yearly sales, is best known for.

But it was not always that way. In the beginning, Golden Krust did not even make patties.

Learning from Dad

Golden Krust started as the American incarnation of Mr Hawthorne's father's bakery back in St Andrews, Jamaica. The Jamaican bakery had no running water or electricity, but it supplied the surrounding rural towns with Jamaican hard crust bread and seasonal delights like Easter buns.

Crucially, however, Mr Hawthorne's father did not make patties because other, better-known manufacturers in Jamaica had already cornered the market there.

So, like his father before him, during the first three years of Golden Krust's existence, Mr Hawthorne's chain bought the beef patties from a competitor in the West Indian restaurant field.

One day, when Mr Hawthorne was visiting family in Jamaica, he got a phone call from one of his staff telling him that his patty supply had been cut off - the competitor decided that Golden Krust was getting too successful.

"So Golden Krust was forced to make patties. My brothers, my sisters did what we had to do to fly over to Europe, going to England, learning how to make patties," says Mr Hawthorne.

Equipped with a Scottish baking method, a chef named Mel, and a new machine, less than a year after the crisis, the business topped sales of $2m for the first time.

Finance was also an issue. Not a single US bank would give the Hawthornes a business loan when they first applied in 1988.

So the Hawthornes were forced to invest their own money in the enterprise, with some going so far as to take out another mortgage on their houses just to scrape together enough money.

The business opened with $107,000 in funding in 1989.

Immigrant dreams

Although the Hawthornes had been successful small business owners in Jamaica, as immigrants, they were also flummoxed by many of the differences in doing business between the two cultures.

"As an immigrant, not understanding the system here made it more difficult," says Mr Hawthorne of the early days of Golden Krust's existence. "Had I lived there and understood how it worked I think we would have gone through it easier."

The problems Mr Hawthorne faced in the early days included the familiar - figuring out the raft of regulations governing food production in New York City - and the not-so-obvious, like recognising a Mafia member when you see one.

"They were the garbage collectors here," recalls Mr Hawthorne with a laugh. "They came and without any questions asked, they put a sticker on your window, telling you what your fee would be."

At first, the Mafia-run garbage squad demanded $250 a week to collect the factory's garbage - but within a few months, they had increased the price to $7,000 a week.

Eventually, Golden Krust decided to stop paying the fee - only to have the Mafia men retaliate by dumping rotting fish heads at the factory's doors.

Still, the Hawthornes held their ground and eventually were able to find a different contractor.

Asian stock markets rose Wednesday amid hopes that the Federal Reserve would announce measures at the end of its two-day meeting to stimulate the U.S. economy. Economists expect the U.S. central bank to either announce new bond-buying plans or ...